Chesterfield condo project on hold

Tuesday, March 18, 2008 at 2:07am

Real estate developers like to say a deal isn’t done until there is signed paperwork in hand.

For developers of The Chesterfield, the deal isn’t done on its construction loan and likely won’t get done for some time. Atlanta-based developer Place Properties was to have completed the loan with Avenue Bank last month on a planned 92-unit condominium project in the Hillsboro Village area.

Now it looks like the project has become a casualty of not a credit crunch but tighter lending requirements.

Cecil Phillips, Place’s chief executive officer, said the bank required the developer to verify the pre-sales to make sure the buyers were serious and would close when the project was finished. There are 44 units reserved with buyers putting down 5 percent of the sales price on the units, which were priced at $200,000 or more.

“I think many, if not most, will fall out,” Phillips said.

He said investors reserved many of the units, in some cases more than one. Place will be asking the buyers about converting to hard sales contracts, he said.

Cash in the deal wasn’t an issue. Phillips said initially the developer was going to put in 20 percent equity. Then it upped to 35 percent, he said.

He said it was a good idea for the bank to press verification.

“I used to represent banks when I was a lawyer,” Phillips said. “I would have recommended it.”

R.C. Mathews Contractor did some site work in the past month, finishing an initial stage.

Now the developer is looking at doing enough work to protect the current density and not have to go back through the zoning process.

“That will give us a 12-month window,” Phillips said.

Place likely would begin marketing the project again to bring in new buyers. Village Real Estate has been handling the sales so far.

Construction was supposed to start on the project last summer, but then the credit crunch hit, sending Place scrambling for a lender.

Meanwhile, some buyers were beginning to grumble and started inquiring about backing out.

Realtor Marion Towle Lopez’s client, an investor who would flip the unit or rent it, put down more than $11,000 a year ago.

“If it’s looking like it’s a year away, he’s going to drop out,” Lopez said. “I’m waiting to have all the details…Since it’s so up in the air, it’s a fear factor.”